A state Supreme Court could establish a precedent with nationwide impact when it rules on a lawsuit challenging the constitutionality of discounted college tuition for illegal immigrants.

The California Supreme Court has decided to take up the heated issue of whether granting illegal immigrants discounted in-state tuition at public colleges violates federal law. The case (Martinez v. Regents of University of California) was filed in 2005 by a group of out-of-state students and parents who correctly claimed that California’s public university and community college system charged them higher tuition and fees than undocumented immigrants.

A lower court dismissed the suit but, in September, a state appellate court ruled that the lawsuit can move forward. The out-of-state students argue that federal law requires states that provide discounted rates to illegal aliens to offer the same benefit to out-of-state students.

The state’s Third District Court of Appeals agreed, ruling that federal law prohibits California from granting in-state tuition to persons who lack lawful immigration status unless it grants the same rate to all U.S. citizens, regardless of California residence.

In an 84-page opinion, the appellate court justices pointed out that a 1996 immigration reform law states that a person who is in the country illegally is not eligible for any state or local public benefit, including any postsecondary education benefit.

Ten states—including Texas, Utah, Oklahoma and Maryland—offer illegal immigrants discounted tuition at public colleges. While the California Supreme Court decision won’t effect them directly, it could establish a crucial precedent if the law is defeated since it will likely lead to challenges in other states.